Eurogroup To Select New Chief At Monday Meeting; Cyprus To Top Agenda

1/21/2013 4:57 AM ET

Euro area finance ministers are widely expected to pick a new president for the Eurogroup in their first meeting in 2013 on Monday in Brussels. The group is also likely to discuss a possible bailout for Cyprus and the disbursement of further aid to Greece.

The ministers will likely vote to elect the Dutch Finance Minister Jeroen Dijsselbloem as the next President of the group, which comprises the finance ministers from 17 Eurozone countries. The post is currently held by Luxembourg Prime Minister Jean-Claude Juncker.

Dijsselbloem, a relative new comer on the European political scene, was appointed the Minister of Finance in the Rutte-Asscher government on November 5, 2012.

However, many people doubt the agricultural economist's ability to lead the body as he is relatively inexperienced compared to Juncker and may lack the power to influence leaders across the euro area.

The bailout for Cyprus is likely to top the agenda for the meeting, where the crisis has deepened on the back of measures to help the neighbor Greece bring its debt to a sustainable level. Cyprus' ratings were downgraded recently by major rating agencies, citing the country's banks' increased exposure to Greek debt.

Cyprus asked for bailout in June last year. It is estimated that the country may need around EUR 17 billion for rescue, roughly equivalent to its overall economic output. The bailout talks between the Cypriot authorities and the troika is still on.

EU Economic and Monetary Affairs Commissioner Olli Rehn has urged Cyprus to tackle the issue of money laundering, which overshadows the country's bailout prospects. The European countries, in particular Germany, has expressed reluctance to lend money to Cyprus unless it counter the menace with strict regulations.

Nonetheless, the ministers are unlikely to make a final decision on Cyprus before the country's presidential elections due on February 17.

At the Brussels meeting, the ministers will also examine if Greece has done enough on the reform front to get further payouts of the bailout money.

In December, Eurogroup agreed to pay EUR 49.1 billion to the debt-stricken country in several tranches. Out of this amount, Greece received EUR 34.3 billion last month and the remaining amount is expected to be released in the first quarter of this year.

In December, the Greek Parliament approved a tax bill, which is expected to raise up to EUR 2.3 billion this year. Earlier this month, the International Monetary Fund released EUR 3.24 billion, saying the program is moving in the right direction.

The euro ministers meeting will be followed by a gathering of finance ministers from all 27 European Union states on Tuesday.